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LANSING — When the bill to extend and expand the agricultural Renaissance Zones was first introduced, the Michigan Economic Development Corp. and the State Treasury sang a sad song about it.

But since then both agencies have since changed their tunes.

The Treasury and the MEDC were concerned that adding more nearly tax-free zones would cut revenue to the state at a time when Gov. Jennifer Granholm and Lansing lawmakers were in need of every tax dollar they could get their hands on.

“Initially, along with all state departments, we were facing a tremendous budget shortfall in the state and, obviously, when we give Renaissance Zone designations, there is a fiscal impact to that,” said Paul Krepps, MEDC director of communications.

Krepps told the Business Journal that the MEDC wasn’t certain the state needed more ag zones than the nine that already exist.

But during the discussion period held for Senate Bill 163, the private sector spoke up.

“There were at least a few companies that came forward and indicated that receiving an agricultural Renaissance Zone designation would be important to tracking their future growth in the state,” said Krepps.

After hearing that zone status would help the ag industry, and possibly provide more jobs, the MEDC and Treasury dropped their opposition to the bill.

A promise from Granholm also helped change their minds.

“She made it very clear with the signing of that bill any new proposals for agricultural Renaissance Zones will be closely scrutinized to make sure that they are really necessary and worthwhile to the state,” said Krepps.

Another argument made against the bill was that local units of government don’t have enough authority to control some ag operations.

Public Act 261 prohibits local units from enacting ordinances that conflict with the Right to Farm Act.

Because the intent of the new law is to provide zone status to food-processing operations instead of food-producing ones, some opponents feared that local units might get entangled in lengthy, legal battles of definitions. Local governments must ratify a zone application before the state can approve one.

Supporters, however, argued that food processing is a vital portion of the state economy and the industry has been in a decline for several years because of low profit margins. (According to The Right Place Inc., food processing is West Michigan’s third largest industrial component.)

The market needed the incentive, they said, to help firms in the state become more competitive.

Another argument for the bill was that during the first round of designations nine of the 10 available zones were awarded, and those producers have committed to creating over 900 new jobs and investing more than $480 million.

Sponsored by Sen. Gerald Van Woerkom, R-Norton Shores, the bill doubles the number of ag zones that can be designated from 10 to 20, and erases the sunset date of the first zone bill passed in 1996, which was the end of last year.

The ag zone, like its urban counterpart, can provide up to 15 years of nearly tax-exempt status.

“The success of our agricultural community is critical to West Michigan families,” said Van Woerkom, whose bill was signed into law in late July.

The Michigan Township Association and the Michigan Farm Bureau supported the bill. Farm Bureau Commodity and Marketing Manager Bob Boehm felt the new law could also help to draw out-of-state ag businesses to Michigan and possibly preserve more farmland.

“We know that the more value we can add to our commodities, the more return there is for the state, rural communities and farmers.

“If we have profitable farmers, we’ll also have more farmland preserved, so everyone benefits indirectly,” said Boehm.

One of the nine designated ag zones is in Grand Rapids.

City commissioners and the State Administrative Board gave the Keebler Co. a designation last November for its baking facility at 310 28th St. SW.

Keebler, a division of Kellogg, said 390 jobs would be retained and another 43 would be created thanks to the designation.

Keebler added it would invest $35 million into upgrading the 22-acre site.

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